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Highlights:
- Energy bills in UK is predicted to soar to £3,000 yearly in October.
- The Bank of England also warned about an imminent recession later this year.
The Bank of England has warned that the UK economy may slip into recession by the end of this year. Besides, energy bills in the country have been predicted to hit £3,000 yearly in October, when the next energy cap revision comes into effect. These grim warnings mean that Brits, who are already reeling under pressure from skyrocketing energy bills, are set to face more troubles.
During economic uncertainties, investors generally prefer safe-haven investments like gold and other commodities as they tend to be more stable than equity markets. However, this doesn't mean that equity investments can't generate profits in such times. Smart investors can still generate returns from stocks that are likely to be more stable than others during such times.
One may think that investing in energy companies would provide excellent returns as their profits are soaring due to high energy bills. This might be true in some instances, but it is important to note that they are also volatile due to the political risks attached to them. A few months ago, the government took a U-turn and announced a windfall tax on the profits of these companies.
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Due to this, renewable energy firms could be safer options for investors who are looking to steer clear of any political backlash. People are now also switching to renewable energy due to high prices, which will eventually raise the profits for companies involved in the generation of renewable electricity.
Kalkine Media® dives into a few stocks working in the renewable energy sector that the investors can look at.
Drax Group Plc (LON: DRX)
Drax Group is primarily deals in producing and supplying low carbon and renewable electricity. The company posted a strong performance in the first half of 2022, with an operating profit of £207 million, significantly higher than the £84 million it generated in the same period last year. The company's analysts now expect its full-year revenues to hit £6.6 billion. The FTSE 250-listed company has a market cap of £2,945.41, and its share value has jumped by 75.55% over the past 12 months. With a Relative Strength Indicator (RSI) of 51.80, the stock was trading at GBX 731.00, down 0.54% as of 9:22 am GMT+1 on Monday.
Greencoat UK Wind PLC (LON: UKW)
As one of the leading investment firms focussing on wind farms in UK, the UKW, in the first half of year generated 2,175GWh of renewable energy. As of 30 June 2022, the group's unaudited Net Asset Value stood at £3,559.7 million. Presently, the FTSE 250 constituent holds a market cap of £3,792.00 million and has generated returns of 24.06% over the past 12 months, while the year-to-date return is 16.48%. The stock currently has an RSI of 68.34, and its earnings per share sand at 0.18.
The Renewables Infrastructure Group (LON: TRIG)
The investment trust focuses on renewable energy assets and is also listed on the FTSE 250 index. Its shares were trading 0.28% higher at GBX 142.20 as of 9:40 GMT+1 on Monday. TRIG stock has given its shareholders a return of 9.04% in the past one year, and the earnings per share currently stand at 0.10.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
